Morning:
8°c
BA boss rejects £700,000 bonus
Jonathan Prynn, Consumer Affairs Editor16 May 2008
British Airways boss Willie Walsh has turned down a £700,000 bonus because of the Terminal 5 fiasco.
The chief executive told his board that a bonus would be "inappropriate" after the botched opening weeks of the £4.3 billion Heathrow terminal. During the launch, more than 20,000 bags were lost and 430 flights had to be cancelled.
Despite this, 43,000 members of staff at BA are celebrating a cash windfall. A £35 million bonus payout has been triggered because the company registered record profits of £883 million.
But Mr Walsh said: "I am not getting a bonus. I felt it would be inappropriate in the context of the very disappointing opening of Terminal 5 in March. So despite the fact it was a record year in terms of our financial performance, I advised the chairman that I thought it would be inappropriate.
"I have made it very clear I was very disappointed at the way we had performed."
However, speaking on BBC Radio 4's Today programme, he made clear he wanted to stay at the helm, saying: "I will be here for another 10 years."
Mr Walsh, who earned a basic £700,000 salary last year, was in line for a 100 per cent bonus because the company hit its target of making a 10 per cent profit margin. BA insiders said the decision to turn down the bonus was a personal one and he came under no pressure from chairman Martin Broughton or the rest of the board.
But he would have faced a huge backlash from City shareholders and angry passengers had he accepted the payment. One leading aviation analyst said: "Good for him, but you can imagine the reaction if he had taken it? All the headlines would have said, 'BA fails but chief executive pockets his bonus'."
Mr Walsh has shouldered responsibility for arguably the worst PR disaster in the airline's history, admitting that the T5 opening on 27 March was "definitely not British Airways' finest hour."
A combination of blunders can be traced back to inadequate preparation. Staff were unable to get into the car park and were not familiar with the new building. Baggage-handling computer systems failed to work.
A huge backlog of bags quickly built up, forcing BA to cancel hundreds of flights, and thousands of passengers had to fly without their baggage.
But most City shareholders have been supportive as Mr Walsh has delivered record profits and the first dividend since 2001. There was no indication of whether the other executive member of the main board, finance director Keith Williams, would refuse his bonus.
There will still be windfalls for many staff and managers involved in the first-day fiasco, but the senior executives most closely involved, operations director Gareth Kirkwood and customer services director David Noyes, have already quit BA.
On average, each BA worker will get £800 each, with a minimum of £500 for the lowest paid.
Mr Walsh said: "This is an outstanding financial result for the company despite rising fuel prices and significant economic slowdown in the last six months. We go into this challenging environment from the position of relative strength."
Steve Turner, national secretary for civil aviation at the Unite trade union, said: "While we applaud Willie Walsh's decision to forgo his bonus, we need to see BA use these profits to address the ongoing concerns of our members." He said staff were coping with " tremendous" pressures.
Reader views (4)
But if you also aware the staff which is not based in UK they will have half of this amount or even less.
- Linda, China, 17/05/2008 16:19
Report abuse
Willie Walsh said the buck stops with him, and forgoing his bonus shows he means it. Bravo!
- V Tan, London, 16/05/2008 16:09
Report abuse
Can I suggest you check your press brief as the minimum figure for employees is now £400 - down from the £500 promised to us when the scheme was announced!
- John, London, UK, 16/05/2008 13:53
Report abuse
At least he has integrity. He should have given it to charity. Perhaps to the Blairs who are so poor.
- Beatriz, London, 16/05/2008 13:46
Report abuse
